Partners

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THE WORLD OF BUSINESS about the feud between Disney’s Michael Eisner and Michael Ovitz. In August of 1995, Michael Eisner, the C.E.O. of the Walt Disney Company, announced that his friend the talent agent Michael Ovitz, head of Creative Arts Agency (C.A.A.), would become the company’s new president. The appointment was described as a management coup. Describes the longstanding friendship between Eisner and Ovitz. Eisner fired Ovitz after 14 months, however, paying him $140 million to settle his contract. This led to a protracted lawsuit, brought by Disney shareholders, who argued that the company’s directors breached their duties to shareholders by succumbing to Eisner’s demands. In October 2004, the suit went to trial, and Ovitz and Eisner were compelled to publicly recount the details of their disastrous partnership. Eisner joined Disney in 1984, after a successful career at ABC and Paramount Pictures. Ovitz founded and ran C.A.A., but he was more of a corporate dealmaker and adviser than a traditional agent. In July of 1994, Eisner tried to persuade Ovitz to join Disney as president. That same month, Eisner underwent open-heart bypass surgery. After the surgery, Eisner’s wife insisted that he needed help running Disney. In August of 1995, Eisner approached Ovitz again about joining Disney, all the while remaining vague about how much of the company’s operations would be under Ovitz’s control. The final deal, which the Disney board never approved, was put together in a single weekend. Afterwards, both Ovitz and Eisner were quoted as saying they thought they’d made the biggest mistake of their career. Ovitz immediately encountered resistance from Sandy Litvack, a top Disney lawyer, and Steve Bollenbach, Disney’s C.F.O. When Eisner failed to put down the rebellion, Ovitz understood that his friend had betrayed him. Unfortunately, Ovitz couldn’t back out of the deal, because he’d already arranged to sell his interest in C.A.A. Ovitz’s hiring was announced August 14th. Describes Ovitz’s conflict with studio chairman Joe Roth over a deal with Brad Grey. Ovitz also resisted attending the weekly staff lunch that Eisner held, which annoyed Eisner intensely. In September, the Disney board unanimously approved Ovitz’s appointment. But Eisner was displeased with Ovitz’s lavish entertaining and gift giving. Ovitz also alienated Bob Iger, the president of ABC. Most of Ovitz’s ideas were vetoed by Eisner-including a deal merging Disney’s Hollywood Records with Sony Records. Ovitz helped Disney keep actor Tim Allen and he also tried to settle the long-running feud between Eisner and former Disney studio chairman Jeffrey Katzenberg. Ovitz negotiated a $90 million settlement with Katzenberg, but Eisner vetoed it. According to Sid Bass, Eisner told him 5 weeks into Ovitz’s tenure that he wanted to fire Ovitz. All this time, the Eisners and the Ovitzes continued their social lives together. In June 1996, Ovitz wrote Eisner a letter enumerating his numerous grievances; this infuriated Eisner. In July, Ovitz irritated Eisner further at the funeral of Eisner’s mother. Afterwards, Eisner informed the Disney board that Ovitz had to go. In October, Sandy Litvack told Ovitz that Eisner was terminating him, but Ovitz refused to leave. Eisner tried unsuccessfully to get Sony to hire Ovitz. Incredibly, Ovitz still thought he could save his job. On December 12th, however, Eisner presented him with a press release announcing his departure. The next morning, Ovitz retreated to Aspen, humiliated. The career of the man known as the most powerful person in Hollywood was effectively destroyed.